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How Disinflation Could Affect Company Financing

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

Published • Updated •
The following content is sponsored by Citizens Commercial Banking

How Disinflation Could Affect Company Financing

The macroeconomic environment is shifting. Since the second half of 2022, the pace of U.S. inflation has been dropping.

We explore how this disinflation may affect company financing in Part 2 of our Understanding Market Trends series from Citizens.

Disinflation vs. Deflation

The last time inflation climbed above 9% and then dropped was in the early 1980’s.

Time PeriodMarch 1980-July 1983June 2022-April 2023*
Inflation at Start of Cycle14.8%9.1%
Inflation at End of Cycle2.5%4.9%

* The June 2022-April 2023 cycle is ongoing. Source: Federal Reserve. Inflation is based on the Consumer Price Index.

A decrease in the rate of inflation is known as disinflation. It differs from deflation, which is a negative inflation rate like the U.S. experienced at the end of the Global Financial Crisis in 2009.

How might slowing inflation affect the amount of debt and equity available to companies?

Looking to History

There are many factors that influence capital markets, such as technological advances, monetary policy, and regulatory changes.

With this caveat in mind, history signals that both debt and equity issuance expand after a period of disinflation.

Equity Issuance

Companies issued low levels of stock during the ‘80s disinflation period, but issuance later rose nearly 300% in 1983.

YearDeal Value
1980$2.6B
1981$5.0B
(Read more...)

Charted: Commodities vs Equity Valuations (1970–2023)

by Bruno Venditti
This post is by Bruno Venditti from Visual Capitalist

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Charted: Commodities vs Equity Valuations (1970–2023)

Charted: Commodities vs Equity Valuations (1970–2023)

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

In recent years, commodity prices have reached a 50-year low relative to overall equity markets (S&P 500). Historically, lows in the ratio of commodities to equities have corresponded with the beginning of new commodity supercycles.

The infographic above uses data from Incrementum AG and Crescat Capital LLC to show the relationship between commodities and U.S. equities over the last five decades.

What is a Commodity Supercycle?

A commodity supercycle occurs when prices of commodities rise above their long-term averages for long periods of time, even decades. Once the supply has adequately grown to meet demand, the cycle enters a downswing.

The last commodity supercycle started in 1996 and peaked in 2011, driven by raw material demand from rapid industrialization taking place in Brazil, India, Russia, and China.

Supercycles in Commodity Prices1899-19321933-19611962-19951996-2016
Peak year1904194719782011
Peak of supercycle from long-term trend (%)10.214.119.533.5
Trough of supercycle from long-term trend (%)-12.9-10-38.123.7
Length of cycle from trough-to-trough (years)33293420
Upswing (years)5151716
Downswing (years)2814174

Source: Bank of Canada, IHS

While no two supercycles look the same, they all have three indicators in common: a (Read more...)

Start-Up Founder Compensation Survey

by Miguel Pinho
This post is by Miguel Pinho from Seedcamp

A data-driven deep dive into founder salary and equity, from Pre Seed to Series A

Welcome to the first edition of the Start-Up Founder Compensation Survey – powered by Graphy.

At Seedcamp, this question comes up time and time again and we struggled to find any reliable data. As a consequence, the purpose of this survey is to provide a clear set of results, based on peer data, absent of bias, for free. A starting point for founders to construct a compelling case to empower their position, especially for those from diverse backgrounds, not an investor-led set of guidelines. More #powertothefounder

I would like to extend thanks and congratulations to Graphy, a Seedcamp company, for the awesome charts and their recent launch!

I would also like to thank the other funds who contributed their data outside of the Seedcamp Nation to help provide insight, namely Anthemis, Notion Capital, and BackedVC (if anyone else’s companies contributed please let me know and I’ll add you here!)

Please read!

We collected a number of variables from the companies that submitted the survey including: Annual Salary; Equity % Held; Company Revenue; Last Round Type; Last Round Size; Number of Co-Founders; Number of Employees; Years in Operation; Geographical Location (HQ); Office Status (Office, Hybrid, Remote)

Please find the forex rates used at the time of generating the charts here.

We have spent countless hours digesting all this data and comparing and contrasting these variables together on hundreds of charts. The conclusion was (Read more...)

How do Institutional Investors Choose ETFs?

by Sponsored Content

The ETF snapshot
ETFs during volatility Part 1 of 5
Fixed income ETFs Part 2 of 5
ETF use cases Part 3 of 5
Evolution of ETFs Part 4 of 5
Choosing an ETF Part 5 of 5

The following content is sponsored by iShares

The ETF Snapshot

Download the ETF Snapshot for free.

How do Institutional Investors Choose ETFs?

Although there are roughly 7,000 ETFs available globally, the majority of assets under management (AUM) belongs to a relatively small number of funds. In fact, among the 100 largest ETFs, the top 20 hold over 50% of the assets.

In this infographic from iShares, we rank the top criteria institutional investors use when selecting an ETF. It’s the last of a five-part series covering key insights from the ETF Snapshot, a comprehensive report on how ETFs are being used.

The Methodology

To assess how institutional investors navigated this volatility, Institutional Investor published a report in 2021 based on a survey of 766 decision makers. Respondents were from various types of organizations, firm sizes, and regions.

For instance, here is how responses broke down by location:

  • 21% Asia Pacific
  • 36% North America
  • 29% Europe, Middle East and Africa
  • 14% Latin America

Here’s what the survey found.

The Top Criteria for Picking an ETF

The following table lists the most important criteria institutional investors consider when selecting an ETF.

Criteria% of respondents (n=762)
AUM, liquidity, and trading volume68%
Benchmark index used53%
ETF provider’s brand and market position48%
Historical performance46%
Value-added services from ETF provider45%
Management fee34%
Transaction cost 29%

n=762

The key takeaway is that institutional investors seek large, highly liquid ETFs that are linked to the right benchmark. Perhaps surprisingly, management fees and transaction (Read more...)

A knock against bootstrapping

by Natasha Mascarenhas

Natasha and Mary Ann and Alex were all aboard this week under the guidance of Chris and Grace, which meant we had the full team. And speaking of teams, Mary Ann is joining the Friday show on a weekly basis now. She’s been a friend for years, and a colleague now twice-over for Natasha and Alex and we could not be more excited.

That personal news aside, here’s the rundown for today’s show!

The Equity crew riffs on the Intuit-Mailchimp news

by Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast where we unpack the numbers behind the headlines.

We are back! From this morning, I suppose. But the news cycle doesn’t wait for our publishing schedule, so the Equity crew got together to yammer all about the Intuit-Mailchimp acquisition.

A $12 billion deal composed of stock and cash, it’s a big one. And as Mailchimp has both a history of bootsrapping and a founding story in a non-Silicon Valley city we had lots to chat about.

As a general reminder, if you do listen to the show, hit us up on Twitter as we are doing more and more of these Spaces. They are good and relaxed fun, so don’t take them too seriously. We like to have fun.

Alright, Equity is back on Wednesday with our regularly scheduled programming. Chat then!

Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday at 6:00 a.m. PDT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!

Equity Monday: Market pessimism, new iPhones, and IPOs

by Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here. I also tweet.

Vacation was good, and a big thanks to Mary Ann and Natasha — not to mention Grace and Chris! — for keeping things flowing while I mostly sat around reading books and playing video games. But enough being maudlin! To the news!

  • Investors are kinda thinking that the run-up in stocks needs to take a breather. And that the reset could land between 5% and 10%, with another 10% of respondents expecting a correction of more than 10%. Yowza.
  • China may break up Ant, keeping the pace of its regulatory deluge going as this week starts. And the Chinese government thinks that its country has too many EV companies. If the market or central planning will wind up taking point on solving the “problem” is not clear.
  • The Apple v. Epic decision is still driving conversation. Here’s TechCrunch’s coverage, and here’s the MG piece I mentioned.
  • Toast and Freshworks have new filings up. Which is good news if you want to dig into new S-1/A reports. Forge is going public via a SPAC.
  • And Babyscripts and Commercetools raised (Read more...)

The pure hell of managing your JPEGs

by Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Alex and Grace and Chris were joined by none other than TechCrunch’s own Mary Ann Azevedo, in her first-ever appearance on the show. She’s pretty much the best person and we’re stoked to have her on the pod.

And it was good that Mary Ann was on the show this week as she wrote about half the dang site. Which meant that we got to include all sorts of her work in the rundown. Here’s the agenda:

Politico sells, Forbes SPACs and Vice cuts

by Alex Wilhelm

The Equity crew felt that there was enough media news out recently that we simply had no choice but to fire up a Twitter Space and have a chat. The above episode is a discussion of a few things, in a loose and relaxed manner, so don’t take any of the Verizon jokes too seriously, Verizon, as we still work for you. For a few more days.

Regardless, here’s what Danny and Alex got into:

  • Politico sells for $1 billion: Its new parent company Axel Springer is also buying the rest of Politico Europe and all of Protocol at the same time. This deal exploded everyone’s Twitter feed due to its scale, and the fact that it was one heck of an exit for a media company. One billion dollars? For media? In this economy? Yes!
  • Forbes is going public via a SPAC: Yep, the venerable Forbes magazing and its enormous digital arm are taking the blank-check route to the public markets, which means that we got its numbers and time to stroll through them. Our take is that Forbes has done massive work to take its IRL brand and extend it into the digital world. The company has big plans to boot, and will be worth more than $800 million when it combines.
  • Layoffs hit Vice: As Vice turns its focus to video content — you’ve heard this story before — it is shedding some of its editorial staff. The layoffs were a stinkbomb (Read more...)

OnlyFans’ policy change is a tale as old as the internet

by Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast, where we unpack the numbers behind the headlines.

For our Wednesday show this week, Natasha and Alex and Danny had colleague Amanda Silberling on the show to help us parse through OnlyFans’ precedent-setting move to ban sexually-explicit content on its service. The decision was a bolt from the blue for many of its creators, a great portion of whom created and monetized adult videos and images through the subscription service. It also stirred up a ton of debate around fintech, crypto, venture capital, and the morality of decision-makers.

We put all the facts in context for you, hitting the following points:

  • OnlyFans’ recently leaked financials. Of course, the company’s historical, and projected revenues are now dated thanks to the platform’s planned content changes, but all the same the numbers help put into context just how much money OnlyFans’ adult creators were earning on its platform.
  • The leaked financials were part of a pitch deck that the company was using on its plight to raise more capital – an endeavor that has apparently been challenging for the startup. This tension made us think about the role that venture capital plays in funding vice startups, and why a tiny clause may stop many from getting into the game. Let’s just say, the money behind the money has a way of having weight.
  • And finally, we wondered what might be ahead for adult-content creators. Per Silberling, the world of adult content has (Read more...)